In 1955, a young African American couple bought a house in Chicago's Hyde Park, the same neighborhood where Barack and Michelle Obama settled four decades later. Unlike the Obamas, Albert and Sallie Bolton had to purchase their home on an installment plan, because in the 1950s federal agencies refused to insure mortgage loans for buyers in racially integrated areas. Facing severely limited options, the Boltons contracted to pay the then-princely sum of $13,900 for a 100-year-old cottage without central heat. The seller, a white real estate agent named Jay Goran, specialized in just this kind of deal: He sold properties for a down payment of only a few hundred dollars, but if the purchasers missed even one installment, Illinois law allowed him to quickly and easily obtain an eviction order for less than $5.

After the Boltons signed the contract, Goran added extra fees to their monthly bills. When they called to complain, he refused to speak to them. Then came repeated visits from housing code inspectors: First the couple had to remove their shutters, then rebuild the front porch, then fix the back porch. After 18 months, the Boltons fell behind on a payment, and Goran filed for eviction. Prospective buyers were already showing up at the house when the young couple sought help from a hardscrabble Chicago lawyer, Mark Satter.

The novel lawsuit that Satter filed on behalf of the Boltons succeeded only in postponing their ouster until 1959. But in the meantime, Satter researched Goran's tactics, learning, for example, that the real estate speculator had purchased the house for $4,300 just a week before he sold it to the Boltons for triple the price, and that he recently had filed repossession claims on 20 other properties. Satter used the information to publicize how the rigid racial segregation of Chicago's housing market cost the city's black citizens $1 million a day in inflated prices and rents.

Now his daughter, Rutgers University history professor Beryl Satter, has turned the story of her father and the Boltons into a penetrating examination of the financial discrimination that thousands of African Americans encountered in their northward migration to cities such as Chicago.

Redlining is a familiar, if poorly understood, word for the refusal to insure mortgages in black neighborhoods. Satter shows how it worked in vivid, personal terms. Her painstakingly thorough portrayal of the human costs of financial racism is, in my view, the most important book yet written on the black freedom struggle in the urban North.

In "Family Properties," she explains that it was not poverty that made black Chicagoans vulnerable to the likes of Jay Goran, because in 1960 two-thirds of the city's whites and 63 percent of its black residents had comparably modest incomes. Rather, she contends, the blame belongs squarely on "the racially biased credit policies of the nation's banking industry" and particularly the pre-1965 Federal Housing Administration.

Following procedures in effect since the 1930s, appraisers rated properties using a color scheme: green for all-white areas, blue and yellow for areas with some foreigners or Jews, and red for areas with black residents. "The FHA's appraisal policies," Satter writes, "meant that blacks were excluded by definition from most mortgage loans" and that "the presence of a single black family usually led to mortgage redlining" of an entire neighborhood. Non-commercial purchasers (white as well as black) found themselves unable to obtain loans in those locations. Speculators like Goran pressed frightened white homeowners to sell, then quickly "flipped" the houses to families like the Boltons, who had no alternative method for buying a home.